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Thu, 04 Jan 2018 00:18:21 +0000info@personalmoneystore.com (Personal Money Store)https://personalmoneystore.com/moneyblog/?p=110444Online Lenders Take the Personal Out of Personal Cash Advances

You can now borrow money through the internet, which is convenient, but online lenders take the personal out of personal cash advances. When you borrow money online, everything will be taken care of remotely through your computer or favorite internet accessing device. In fact, you may not even speak to your lender on the phone

You can now borrow money through the internet, which is convenient, but online lenders take the personal out of personal cash advances. When you borrow money online, everything will be taken care of remotely through your computer or favorite internet accessing device. In fact, you may not even speak to your lender on the phone or online.

Online Personal Cash Advances Make Lending Streamlined and Impersonal

Online personal cash advances generally feature a streamlined application process, one that usually takes just minutes to complete. While this makes requesting a loan fast and easy, it also makes it impersonal.

What Lending Used to Look Like

Provenir reports that holding items as collateral is one of the oldest forms of lending, making early lending a personal transaction. To borrow money, a borrower would have to bring the lender something of value. This decreased the risk to the lender. During the middle ages, the rich lent money to borrowers who then worked off what they borrowed.

In the early 1800s, the Philadelphia Savings Fund Society came into existence. It was set up to give everyday people access to loans, offering them an easier way to save money. The late 18th century saw the building of societies. In this case, people paid monthly membership subscriptions, which covered the cost of building the homes of others.

What Lending Looks Like Now

Technology and the use of data has transformed lending into an automatic process, one that has lost its personal touch. While borrowing money is no longer a personal thing, it is safer for everyone involved. A lender is able to vet a borrower thoroughly before depositing a loan in his or her checking account. Also, borrowers can use the internet to make sure that they’re requesting money from a legitimate lender.

In addition to conveniences like direct deposits and fast application processing, today’s lending also features handy options like being able to make your payment automatically from your checking account. Many lenders also have software that allows them to withdraw it from your bank account.

The Online Lending Application Process for Personal Cash Advances

When it comes to the application process for personal cash advances, NerdWallet reports that before applying, you should check your credit score. Financial institutions tend to rate credit scores in four categories, which are excellent, good, fair or average and bad.

Knowing what yours is will help you determine how easy it will be for you to receive loan approval and how costly it could be. If your credit score is on the low side, then you may still qualify for a personal cash advance, but you will likely pay a higher annual percentage rate, or APR, for the loan.

Shop Around for a Personal Loan

To shop for a personal loan, assess available loan amounts, interest rates and monthly payment terms. Check with your bank or credit union as well as other financial institutions. If you’re a borrower with bad credit, then credit unions and online lenders will likely be your best bet for a loan.

Once you’ve found a personal loan that works for your situation, set aside a few minutes for the application. The form will likely ask you about the amount you wish to borrow, your income and age. You may also need to share your banking account information and address.

Read the Terms of Each Loan Offer

With any kind of financing, it’s important to read the fine print. Check for prepayment penalties. Most online lenders don’t charge for paying a loan back early, but it’s a good idea to confirm that your lender won’t.

Also, look for automatic withdrawals. Some online personal cash loan lenders require access to your checking account to complete automatic withdrawals. If your lender does, then it might be wise to ask your bank to set up a low balance alert for you. This will help you avoid overdraft fees.

What Kind of Purchases Should You Make with a Personal Cash Advance?

Personal cash advances are a financial product meant for emergencies. If you’re suddenly facing a car repair or an unexpected medical expense, then a personal cash advance may be the thing that keeps you going until your next paycheck.

Keep in mind that this type of loan is designed for short-term use, so be sure to pay it back by the due date. If you fail to repay it on time, then you’ll be at risk of falling into a cycle of debt.

Things to Know About Personal Cash Loans

U.S. News reports that personal cash loans are often expensive because you’ll wind up paying a fee for the loan. Personal cash advance lenders typically charge around $15 for every $100 that you borrow. Also, keep in mind that you’ll probably be required to pay the loan back in two weeks or by your next payday. These are the kind of loans that people tend to roll over. Rolling over a personal cash loan often results in a cycle of debt.

Alexander Stern, a consumer attorney in Berkeley, California, said, “A $1,000 loan can balloon into three times that amount given enough time and interest.” He went on to say, “Advertisements highlight the best parts of a product and rarely discuss the worst aspects.”

Embrace a Faceless Personal Loan Process

While a personal touch would be a nice service element to the personal loan process, finance companies aren’t about to change a system that works so much in their favor. Because of this, most borrowers will be forced to embrace a faceless loan application process.

If you have questions, you can contact your lending company by phone or email. Personal cash advances are financial products that most people seek when a financial emergency has caught them off guard. To learn more about them, visit the Personal Money Store.

Money emergencies are scary situations, ones that may cause you to consider a poor credit installment loan. But are poor credit installment loans the best choice? Explore these seven alternatives first. They range from building up a savings account to getting rid of bills. Are Poor Credit Installment Loans the Way to Go? Look Into

Money emergencies are scary situations, ones that may cause you to consider a poor credit installment loan. But are poor credit installment loans the best choice? Explore these seven alternatives first. They range from building up a savings account to getting rid of bills.

Are Poor Credit Installment Loans the Way to Go? Look Into These Seven Alternatives

When you need money, poor credit installment loans can provide it. However, taking one out could cause you to get stuck in a cycle of debt. An installment loan is a financial product that you can pay back over a set period of time such as over a six-month period. This type of loan is a good option for those who need money right away but know that they won’t have the funds to pay it back in a few weeks.

Ask to Work Overtime Hours

If you work a job that pays you hourly, then ask your employer for overtime hours. More hours give you a bigger paycheck. In addition, overtime hours are paid at time and a half. If your employer is open on the holidays, volunteer to work them. Companies often pay double time and a half to employees who work holiday shifts.

Increase Your Money on Hand by Applying for a Second Job

The Balance recommends getting a second job because taking this step is a good alternative to poor credit installment loans. While working more hours is likely to be tough on your home life, it can help you build an emergency fund. It can also give you more money on hand. If an unexpected bill like a medical expense comes up, you may be able to put off paying for it until you start receiving a paycheck from your second job.

You may have a unique skill or hobby that’s in demand. If you do, set up your own little side business to earn extra cash. For instance, if you know how to play a musical instrument, you may be able to give lessons or play at restaurants and weddings. If you’re a skilled cook, consider bottling something special to sell at local farmer’s markets and craft shows.

Build Up an Emergency Savings Fund

According to CNBC, an alternative to bad credit installment loans is to build up an emergency savings fund. Greg McBride, the chief financial analyst for Bankrate.com, said, “Nearly 30 percent of Americans don’t have any emergency savings at all. Every little bit you can squirrel away in a savings account acts as a buffer.”

Start with a small portion. With consistency, your emergency savings fund will build. If you can collect enough emergency money, then you’ll be ready the next time you face a financial emergency.

Modify the Amount of Taxes that You’re Withholding

If you typically receive a tax refund when you file but are struggling to begin an emergency fund, then consider modifying the amount of taxes that your company is withholding. The Internal Revenue Service has a calculator on its website, one that will let you figure out the amount of taxes that you should have withdrawn from your paycheck.

Use caution with this alternative to poor credit installment loans. If you don’t have enough taxes withheld from your paycheck, then you’ll wind up owing taxes to the government come April.

Eliminating Some of Your Bills is an Alternative to Poor Credit Installment Loans

Avoid taking out an installment loan by eliminating some of your bills. Getting rid of bills takes focus and consistency. Make a list of your current bills. You may have some that you didn’t know about. For instance, you may have a gym membership that’s being charged to a credit card automatically, one that you aren’t using.

To eliminate some of your bills, look for ways to consolidate. You may be able to combine your homeowner’s insurance and your auto insurance. Or, if everyone living in your home has his or her own cellphone plan, you may be able to get into a family plan and save money.

Take Out a Credit Card Cash Advance

Credit card cash advances aren’t cheap. In fact, this is the most expensive way to use a credit card, but since it will probably cost less than a personal cash loan, it’s considered a good alternative. Use caution with this alternative though because like installment loans, credit card use quickly turns into a cycle of debt.

Balance transfer checks are better if your credit card issuer offers them. But, this option also comes with a fee. If you use a credit card cash advance, then avoid using the account for any other purchases, and pay the balance off as quickly as you can.

Just Pay for the Emergency Purchase with a Credit Card

If you have poor credit, then qualifying for a credit card may be an issue. Consider getting a secured card to build your credit score. Once you have a credit card, then the best alternative to an installment loan may be to just use it. But, use it responsibly. This includes paying what you charge in full by the due date.

Avoid Going Into Debt by Using an Alternative Option

Borrowing options are limited for those who have a low credit score, making installment loans a helpful financial product, but because they are a loan, they’ll cause you to go into debt. Avoid going into debt by using an alternative option. Choices include working overtime hours, taking on a second job or withdrawing a cash advance. To learn more about installment loan alternatives, visit the Personal Money Store.

Technology always inspires change, and one change that was brought by the internet was the ability of lenders to offer personal loans online. Instead of having to take time off from work to meet with a banker or travel to lender’s storefront, borrowers could submit a loan request from home whenever it was most convenient

Technology always inspires change, and one change that was brought by the internet was the ability of lenders to offer personal loans online. Instead of having to take time off from work to meet with a banker or travel to lender’s storefront, borrowers could submit a loan request from home whenever it was most convenient for them. The application process was typically quick and easy, the borrower did not risk being identified by neighbors or co-workers when entering a lender’s store and there was no risk of being overheard requesting a loan by phone. However, new regulations are making things more difficult for lenders offering personal loans online.

Regulatory Issues Facing Lenders Offering Personal Loans Online

Although the early releases did not specifically include personal loans online, from the moment that the Consumer Financial Protection Bureau released its first white paper on payday loans, the news has been dominated by the new regulations that the agency would be issuing. The new rule was finalized by the CFPB in October 2017. The new regulations cover loans that require borrowers to repay most or all of the loan in a lump sum payment. This includes payday loans, vehicle title loans and installment loans featuring balloon payments.

States Have Been Expanding Laws Regarding Personal Loans Online

A decade ago, few states had laws pertaining to lenders who offered personal loans online. In fact, many states did not have a legal position on cash advance or payday loans. A few states banned short-term, high-interest loans outright or capped interest rates too low for loans made to customers with credit difficulties to be profitable. However, as the CFPB became more vocal about small-dollar loans with high interest rates, an increasing number of states began to enact legislation covering these types of credit products.

For example, payday loans are illegal in New York whether the resident obtains them in person or online. Since the loans are illegal, borrowers are not legally required to repay them. Similar laws exist in several other states, including Georgia, New Jersey, Connecticut and North Carolina. More states are expected to pass laws that specifically include personal loans online as well as those obtained through storefronts.

Even Marketplace Lenders Are Potentially Facing Increased Regulation

Marketplace lenders, originally called peer-to-peer lenders, were born in the high-tech environment of San Francisco. These lenders make both personal and business loans by connecting borrowers with investors who are willing to invest or purchase the loan.

Since 2015, a variety of federal agencies have shown an interest in marketplace lenders, according to the Bank Administration Institute. In July 2015, the Department of the Treasury issued a request for information. In November 2015, the FDIC advised banks on risk management for purchased loans, suggesting that regulators may be considering regulating lenders by leveraging the lenders’ banking relationships. In March 2016, the CFPB — following the same pattern used for designing regulations for payday lenders — asked borrowers to submit any complaints related to online lenders.

There is also the possibility that the Securities and Exchange Commission may decide to exert its regulatory powers over marketplace lenders, according to the American Bankers Association. However, unless the SEC decides that the loans are actually retail investments, the SEC may not take a stance on the issue. However, the Office of the Comptroller of the Currency has also been soliciting comments and will likely be the first federal agency to address the issue of marketplace lending.

What Is the Future of Personal Loans Online?

The CFPB already has its hands full. Trump, no fan of the agency, circumvented attempts by the agency’s departing director to name his own successor by appointing Mick Mulvaney to head the agency. Like Trump, Mulvaney is anti-CFPB and has been rather vocal about his feelings. The spurned would-be acting director is still waging a court battle over the issue, so things are a bit confused at the agency right now. Since the Republicans have already overturned one of the CFPB’s rules through the Congressional Review Act, the agency may not be too eager to launch any new initiatives in the immediate future.

In an article on Forbes.com that was published in 2016, the author predicted that there would be little done in the way of regulating online lenders during 2017. So far, the author has been correct.

However, in the world of government regulations, things can turn on a dime. If Trump can manage to get a kindred spirit approved as the permanent director of the CFPB, the agency will probably need some time to adjust to a new philosophy, a new leader and a new vision for the agency. In the midst of so much instability, it is unlikely that the CFPB will be extremely proactive about reining in online lenders.

Other federal agencies, however, are enjoying greater stability. This allows them the luxury of the business-as-usual attitude denied the CFPB. The question is whether they have enough interest to devote their time to the issue.

The greatest threat to lenders offering online personal loans is likely to develop at the state level. There are still many who feel that regulations for financial institutions are the domain of the states; they feel that the CFPB has overstepped its jurisdiction and infringed on the rights of the states. Should it appear that the CFPB rules will be thrown out, some states will no doubt feel compelled to take matters into their own hands.

The Story Is Not Yet Complete

With so many complex issues, the fate of online lenders remains unknown. You might want to follow this developing story by visiting the Personal Money Store and reading some of the many helpful articles posted there.

]]>no Lenders Offering Personal Loans Online Face Regulatory Headwinds Technology always inspires change, and one change that was brought by the internet was the ability of lenders to offer personal loans online. Instead of having to take time off from work toPersonal Money Store Lenders Offering Personal Loans Online Face Regulatory Headwinds Technology always inspires change, and one change that was brought by the internet was the ability of lenders to offer personal loans online. Instead of having to take time off from work to meet with a banker or travel to lender&#8217;s storefront, borrowers could submit a loan request from home whenever it was most convenient Personal Money Store - Breaking News on the Markets, Economy and Business financial,news,celebrity,gossip,politics,economy,jobs,crisis,tragedy,popular,personalitieshttp://personalmoneystore.com/moneyblog/lenders-offering-personal-loans-online-face-regulatory-headwinds/https://www.aba.com/Tools/Offers/Documents/Chapman_Regulation_Marketplace_Lending_0317.pdfDon’t Let Online Payday Advances Leave Better Options Ignoredhttp://feedproxy.google.com/~r/personalmoneystore/cHoR/~3/fpTgCLr8Xrw/
Thu, 28 Dec 2017 22:32:53 +0000info@personalmoneystore.com (Personal Money Store)https://personalmoneystore.com/moneyblog/?p=110443Don’t Let Online Payday Advances Leave Better Options Ignored

Online payday advances are there for you in a pinch, but don’t ignore other options because they may be better for your financial well-being. If you’re in a financial emergency and in need of a loan, consider your options before entering into a borrowing agreement. Don’t let online payday advances leave better options ignored. There

Online payday advances are there for you in a pinch, but don’t ignore other options because they may be better for your financial well-being. If you’re in a financial emergency and in need of a loan, consider your options before entering into a borrowing agreement. Don’t let online payday advances leave better options ignored. There are others that may save the day and your financial future.

Borrowing Options that are Better than Online Payday Advances

Investopedia published an article recommending personal installment loans, bank or credit union cash advances and loans from retirement accounts as good alternatives to online payday advances. The finance site also pointed out the benefits of borrowing money from friends and family, life insurance policies and online lenders.

Why an Installment Loan May Be the Way to Go

This type of loan is unsecured, and you’ll apply for one through a traditional financial institution such as a bank or a credit union. With an installment loan, you’ll have at least 90 days to pay the money back. Also, you can get one without putting up collateral.

The lenders of installment loans limit rolling them over into new loans with new terms. These lenders will also look into your ability to pay the money back by assessing your sources of income before lending you the funds. For many people, installment loans are a long-term financial solution.

Bank or Credit Union Cash Advances Can Help if Your Borrowing Choices are Few

Most banks and credit unions offer overdraft protection or an overdraft line of credit. While borrowing funds this way through your bank may be pricier than an installment loan, it is likely to cost less than online payday advances. The trick here is to sign up for the service before you need it, so check with your financial institution about their overdraft protection services.

Consider a Loan from Your Retirement Account

If you’re looking at a serious financial shortage, then borrowing money from a retirement account is an alternative to taking out an online payday advance. If you have an IRA, then you can withdraw funds from it annually without incurring a penalty as long as you pay the funds back within 60 days.

Some employers allow their workers to take out loans against their 401(k) accounts. Keep in mind that if you do borrow from your retirement account, then you won’t be earning interest on the withdrawn funds.

Life Insurance Policies are a Unique Borrowing Option

If you have cash value in an insurance policy, then your insurer may allow you to take out a loan against it. The nice thing about borrowing money this way is that you can pay it back later. Also, if you’re not able to repay it, then the company will just take it out against the death benefit.

Online Lenders are Becoming a Major Player in the Financial Sector

Online lenders are offering loans to help people with their educations. Some will even help borrowers rebuild marred credit scores. If you search the internet, you’ll come across lenders that provide affordable loans.

Borrow Money from an Affluent Friend or Family Member

When you borrow money from someone you know, it can put a strain on the relationship. So, consider this option carefully. If there is someone in your life who is financially comfortable and you know that you can pay a small loan back quickly, then go ahead and ask this person for money.

To keep your relationship in good shape, offer to pay a fair interest rate, and be sure to pay it back when you say you will. If you fail to do so, then you’ll likely create tension in your relationship.

There is Such a Thing as a Payday Alternative Loan

The Simple Dollar reports that a payday alternative loan, or PAL, is a good borrowing option for you if you have debt that you owe. This type of loan is also recommended for customers with credit difficulties. Backed by the Federal Government, a PAL is designed to help you if you are currently dealing with payday loan debt or in need of emergency cash.

What You Should Know About a PAL

PAL loans range from $200 to $1,000. They also feature loan payoff terms that are from one to six months. Expect to pay a processing fee of as much as $20 as well as an annual percentage rate, or APR, of around 28 percent for this kind of loan.

To qualify for a PAL, you must be a member of a federal credit union for a month or more. Also, a PAL cannot be rolled into another loan, so you will need to pay it back by the due date.

How Your Credit Score Plays into a Loan

NerdWallet reports that a borrower’s credit score affects the interest rate that the individual will be required to pay for a loan. A person with poor or average credit may qualify for an unsecured personal loan based on their having a steady source of income and little debt.

When lenders say that they offer loans for those with bad credit, interest rates for these funds are usually around 300 percent annually or more. Borrowers with poor credit may receive the money that they need, but they will likely pay annual rates that are around 36 percent for the loan.

There are Alternatives to Online Payday Advances

Online payday advances are convenient and in most cases, easy to get. They are also processed fast. Lending companies that work in this sector often deposit payday loan funds within one or two business days, but don’t ignore better options for the ease of payday loan funds. Be sure to take some time to shop around.

A payday loan alternative may provide the funds that you need with payment terms that work for you. To learn more about payday loan alternatives, visit the Personal Money Store.

When financial emergencies strike, don’t let advance cash loans wreck your finances. If you turn to cash loan direct lenders, you could become trapped in a cycle of debt, putting your financial future at risk. Instead, take steps to protect yourself. Advance Cash Loans Can Wreck Your Finances As long as advance cash loans are

When financial emergencies strike, don’t let advance cash loans wreck your finances. If you turn to cash loan direct lenders, you could become trapped in a cycle of debt, putting your financial future at risk. Instead, take steps to protect yourself.

Advance Cash Loans Can Wreck Your Finances

As long as advance cash loans are paid in full and on time, you should be able to hang on to your financial well-being. Borrowers run into trouble when they don’t pay their loan by the due date. If this happens to you, then advance cash loan lenders are usually quite accommodating. They’ll let you roll an old loan over into a new one.

When you roll a loan over, you’ll end up with more fees and a later payoff date, prolonging the loan. While the fees for a cash loan seem low, they are high when you calculate the annual percentage rate, or APR, that you’re being charged.

Let’s Take a Look at the APR Details

The United States Federal Trade Commission, or FTC, published an example of the APR that you’ll pay for a cash loan. According to the agency, if you borrow $100 for two weeks and pay the lender a $15 fee, then you’ll pay an APR of 391 percent.

Every time you roll the loan over into a new lending agreement, you’ll pay a higher rate. Research shows that even though advance cash loans are meant to be short-term lending products, on average, most people who borrow them end up in debt for more than six months.

How Can You Avoid Advance Cash Loans When You Need Money Fast?

The best way to avoid advance cash loans is to establish a savings fund, but today, doing so isn’t easy. If you need money fast, alternatives to cash loans exist. One Main Financial reports that the best alternatives to cash advance loans include attempting to arrange a payment plan with your current creditors, taking out a personal loan or withdrawing cash from a credit card.

The Benefits of Arranging a Payment Plan

If you’ve suddenly found yourself in a cash shortage and are facing late payments with your current creditors, contact them to see if they’ll agree to a payment arrangement. They may allow you to pay a small portion now and the rest later. Often, they’ll agree to new terms without dinging your credit history.

Lenders will do this because it’s better for them to collect what you owe from you instead of going through a third-party collector. Once an account reaches a third-party collector, the lender will only receive a small percentage of the amount that they lent to you.

Taking Out a Personal Loan Has Its Advantages

If you belong to a financial institution like a bank or a credit union, then you may be eligible for a personal loan. This type of borrowing option is typically a short-term loan, one that features lower rates than what you would pay to a cash loan lender.

Withdrawing Cash from a Credit Card May Be the Best Option

Withdrawing cash from a credit card is a fast and convenient option. Interest rates for credit card cash advances are generally higher than they are for other types of loans, but the APR is still usually lower than it is for cash loans.

Apply for a Payday Loan Alternative

The National Credit Union Administration, or NCUA, now permits federal credit unions to offer their members small-dollar loans. In the industry, these loans are referred to as payday alternative loans or PALs.

The Ins and Outs of a PAL

To be eligible for a PAL, you must have been a member of an NCUA financial institution for at least one month. This type of loan is available in amounts that are between $200 and $1,000. In addition, the loan terms for a PAL range from one month to six months.

If a credit union agrees to lend you money under a PAL, then it can only charge you a fee to recoup the processing costs. This fee cannot be more than $20. You will not be able to roll a PAL over into a new loan.

Some credit unions provide financial counseling advice free to their members. If you are having trouble managing your budget, consider taking yours up on it if it does. This will help you keep your future finances intact.

Tips for Creating a Budget that Works for You

When it comes to creating a budget, it’s important to be realistic. So, be sure to include your daily, monthly and yearly expenses. Also, eliminate any purchases that are unnecessary. Keep in mind that small, seemingly trivial, expenses add up. For instance, if you purchase your lunch out or get a fancy coffee several times a week, then these costs could be what’s pushing you over your budget.

While keeping your expenses down, work to build your savings. Small deposits help. But, establishing a set savings plan will put you on the path to success. Once you have money in a savings account, you can avoid taking out a loan for an emergency.

Take Steps to Protect Your Financial Future

Advance cash loans are known for wrecking the finances of those who borrow them. Don’t let this happen to you. If this kind of loan is your only option, then use caution if you decide to take one out.

When you borrow money through a short-term lender, be sure to repay the loan by the due date. Avoid rolling a cash loan over into a new one, and take steps to build up a savings account for future financial emergencies. To learn more about advance cash loans, visit the Personal Money Store.

]]>http://personalmoneystore.com/moneyblog/dont-let-advance-cash-loans-wreck-finances/In Major Role Reversal, the Short Term Loans Industry Takes on the CFPBhttp://feedproxy.google.com/~r/personalmoneystore/cHoR/~3/QiO9jUvp0NE/
Tue, 26 Dec 2017 22:19:56 +0000info@personalmoneystore.com (Personal Money Store)https://personalmoneystore.com/moneyblog/?p=110438In Major Role Reversal, the Short Term Loans Industry Takes on the CFPB

Lenders who offer short term loans, including payday loans, cash advances and deferred deposits, became the subject of intense scrutiny from the Consumer Financial Protection Bureau almost as soon as the agency was officially created. Over the years, the CFPB has actively campaigned against the companies making these types of small-dollar loan products. Many of

Lenders who offer short term loans, including payday loans, cash advances and deferred deposits, became the subject of intense scrutiny from the Consumer Financial Protection Bureau almost as soon as the agency was officially created. Over the years, the CFPB has actively campaigned against the companies making these types of small-dollar loan products. Many of the press releases issued by the CFPB reported on the numerous lawsuits filed by the agency against check cashing services and other “fringe” providers of consumer financial services. In late November, lenders specializing in short term loans turned the tables and filed suit against the CFPB.

Industry Association Sues the CFPB in Attempt to Protect Short Term Loans

Short term loans are a key consumer credit product targeted by new rules written by the CFPB. The CFPB has always maintained that such loans mire borrowers in a cycle of debt by requiring unmanageable lump sum payment plans. The agency has also decried the annualized percentage rates on these relatively small loan amounts.

The Community Financial Services Association of America, or CFSA, is a trade association that has spent 18 years seeking to promote responsible lending practices while working to encourage regulations and laws that are fair and balanced. The CFSA argued unsuccessfully against the new regulations from the time that the CFPB released its first draft of proposed rules. Dennis Shaul, the CFSA’s CEO, wrote in one letter to the CFPB that the new rules overstepped the agency’s authority and that the rules were arbitrary, unnecessary and overreaching. On November 30, USA Today reported that Shaul has announced that the CFSA was “poised” to file a lawsuit challenging the new regulations.

What Are the CFSA’s Issues with the New Regulations?

Most lenders who offer short term loans deal with many customers with credit difficulties. These borrowers would be unable to qualify for a bank loan or traditional credit card, and many credit unions would be unable to help them as well. Therefore, most lenders do not base their decisions on just the borrower’s credit score. The borrower gives the lender a postdated check or the authority to collect the payment through an electronic draft of the borrower’s checking account.

• The new regulations require lenders to perform an underwriting process similar to what traditional banks perform. Lenders must verify that the borrower can repay the loan when it is due and still have sufficient funds to cover normal living expenses without needing another loan for at least 30 days. As noted in an article appearing on PaymentsJournal.com, the administrative costs are substantial; the costs are the same whether the loan is for 14 days or 48 months. This is one reason that most banks stopped making these types of loans many years ago.

The rule limits the number of covered loans that a borrower may be granted. Lenders may approve a loan of $500 or less without underwriting, but only under certain conditions. These conditions include verifying how many similar loans the borrower has already had during a rolling 12-month period.

• This provision essentially requires a lender to verify the borrower’s history with every other lender. The CFPB plans to accomplish this by requiring lenders to join and report to a service that will have a database of loan activities. However, the CFPB has been extremely vague on how many services will be available, who will control them, how much the service will cost lenders and virtually every other detail about the proposed services.

Although the CFSA has other issues with the new regulations, the above two problems alone are sufficient to drive many lenders out of business. This means that millions of Americans who rely on short-term loans to meet financial crises could find it difficult or impossible to obtain the help that they need. CFSA objects to regulations that could deny access to credit to borrowers who are often among those with the fewest options.

Is the Data Used by the CFPB Flawed?

Another issue that could arise during the course of the lawsuit is the accuracy of the data used by the CFPB to justify the new regulations. For example, when the CFPB released its proposed new rules in 2015, the agency asked for comments from consumers regarding their experience with payday lenders.

After the CFPB failed to release any statistics on the comments received, the CFSA was able to use the Freedom of Information Act to obtain the comments. According to the Washington Examiner, 12,308 of the 12,546 comments the CFPB received reflected positively on the payday lending industry. That the agency was not forthcoming about the comments and that it took an open records request to obtain them indicated that the agency was on an “ideological crusade,” according to Shaul.

What Does the CFSA Expect to Accomplish?

Whether the CFSA expects the court to overturn the new regulations is a matter for speculation. However, the CFPB is in turmoil over the departure of Richard Cordray — the only director that the agency had ever had — and the struggle that ensued when Trump appointed a new acting director to replace Cordray’s hand-picked successor. The CFPB might be willing to look at the rule with fresh eyes and consider alterations to the rule. Alternatively, the agency could simply decide that the time spent defending the regulations in court could be better spent on other issues.

Should Borrowers Be Concerned About the CFPB’s New Rules?

Although borrowers are justified in wondering whether short term loans will be available when needed, it is too early to bury the industry. If the new regulations stand, some lenders will certainly decide to close up shop and take their investments elsewhere. Other lenders will weather the storm, possibly by finding innovative ways to service their customers without violating the law.

As the battle could go on for another 18 months, consumers might want to follow the developments or begin researching alternatives to improve their financial situations. If so, a visit to the Personal Money Store could prove beneficial as there are many useful articles covering short term loans and other forms of consumer credit.

Short term installment loans are financial products that can bail you out of a financial emergency. But, in many cases, borrowers struggle to pay these loans back by the due date. Because of this, it may be better to steer clear of the borrowing option. Here are seven ways to avoid short term installment loans.

Short term installment loans are financial products that can bail you out of a financial emergency. But, in many cases, borrowers struggle to pay these loans back by the due date. Because of this, it may be better to steer clear of the borrowing option. Here are seven ways to avoid short term installment loans.

The Best Seven Ways to Avoid Short Term Installment Loans

According to Elite Personal Finance, short term installment loans are generally available in small-dollar amounts. Most lenders allow those in need to borrow anywhere from $100 to around $1,500. Often, these funds must be paid back within a few weeks. The short repayment schedule causes trouble for many borrowers.

If a borrower is unable to pay the money back in full by the payment due date, then the loan either becomes delinquent or the borrower rolls it over into a new loan product with new repayment terms. In most cases, rolling over a loan is a fee-based service, so the borrower winds up increasing the amount that he or she owes to the lender by incurring additional fees.

Because short term installment loans frequently turn into long-term debt problems, it may be best to avoid taking one out. Instead of taking out a short term installment loan, plan ahead by building up an emergency savings fund. According to Debt.org, you should also do everything possible to maintain full-time employment and pay with cash.

Steer clear of a short-term loan by using your bank’s overdraft service, taking on a second job or selling personal belongings. You can also ask for help from a church or community program.

Focus on Building an Emergency Savings Fund

An emergency savings fund is one of the best and easiest ways to avoid installment loans. If money is tight, start slow. Try saving just $10 or $20 every week or each month and increase it when possible. If you allow your bank to move money to your savings account automatically, you may not even notice the shortage. Before you know it, you’ll have grown a sizable savings fund.

Do Everything Possible to Remain Employed

With today’s uncertain times, staying employed can be a struggle, but to avoid debt, do everything possible to remain employed full-time. Creating positive work relationships, conducting yourself professionally in every work situation and staying up to date on your job skills will help you do so.

Pay for Stuff with Cash

To avoid debt, pay with cash. If you want to purchase something but don’t have enough money, then wait until you do to buy it. This debt-avoiding technique will not only help you stay within your budget, but it will also show you that many purchases are unnecessary and frivolous. It also encourages self-discipline.

Use Your Bank’s Overdraft Protection Service

To help their customers avoid overdraft fees, many banks offer a protection service. Often, this is a free program and all you have to do to get it is apply. If a cash emergency suddenly arises, you can use your bank’s overdraft protection service to cover it.

When you use it, the funds are added to a line of credit, so your bank will likely set up required payments until you’ve repaid the amount that you borrowed. Financial institutions charge interest for this feature, so pay the money back as soon as possible.

Take on a Temporary Second Job

If your goal is to avoid taking out an installment loan when you need extra cash, then take on a second job temporarily. It’s tough to increase your work hours, but staying out of a cycle of debt is worth the effort. Put the extra money that you’re earning into a savings account until you have enough to never need this type of loan.

You may need to be creative to avoid short term installment loans. There’s a reason why the saying “necessity is the mother of invention” is a popular one. Many people start their own businesses because they found themselves in need of money.

So, if you have a talent or are good at baking or sewing, now might be the time to use these skills to earn money. Bake and sell homemade treats during the holidays or sell handmade blankets on social media pages. Clean homes or people’s cars to earn a little more cash.

Sell Personal Belongings that You Aren’t Using

Most of us have a few unused things around the house that are valuable. Whether it’s unneeded furniture in your basement or a fancy dress that you’ve never worn, you likely have personal belongings that you could sell to avoid taking out an installment loan.

With the internet and social media, it’s easy to sell this stuff. Try listing it on several sites to get rid of it quickly and for the most money. Along with acquiring extra cash, you’ll also declutter your home.

Ask for Emergency Financial Help from Churches and Local Community Organizations

Most neighborhoods have churches or local community organizations that will help people when they’re facing a financial emergency. When it comes to churches, you may need to be a member of it to receive assistance. Local community organizations may just require you to be a member of their community.

A church or local community organization may pay for a water bill, groceries or even a car payment. If you need help keeping your power bill paid, then you may be eligible for the Low Income Home Energy Assistance Program, so be sure to check.

You’ll Be Happier if You Stay Out of Debt

The Simple Dollar reports that debt can have a serious emotional impact, and you’ll likely be happier if you stay out of it. Get a second job if you need more money, or seek help from your church. If you have a financial emergency, sell things that you aren’t using. To learn more about ways to avoid short term installment loans, visit the Personal Money Store.

When it comes to the installment loan industry, there are many opinions. Those who have good credit, access to credit cards and middle class paychecks tend to view the industry as predatory and in need of major regulation. However, people who earn low wages, have poor credit and face limited borrowing options often view the

When it comes to the installment loan industry, there are many opinions. Those who have good credit, access to credit cards and middle class paychecks tend to view the industry as predatory and in need of major regulation. However, people who earn low wages, have poor credit and face limited borrowing options often view the installment loan industry as a needed business.

Regulation Coming Down the Pike

The Consumer Financial Protection Bureau, or CFPB, released a list of proposed regulations to eliminate what it refers to as “debt traps” by the lending industry. Proposed regulations include limiting the amount of interest that lenders can charge, decreasing the number of loans that borrowers can take out and forcing lenders to assess a borrower’s ability to repay a loan.

Richard Cordray, the director of CFPB, said, “Extending credit to people in a way that sets them up to fail and ensnares considerable numbers of them in extended debt traps is simply not responsible lending.” He went on to say, “It harms rather than helps consumers. It has deserved our close attention, and it now leads to a call for action.”

The Installment Loan Industry Pushes Back

According to the installment loan industry, the regulations proposed by the CFPB are heavy-handed, and once they’re in place, they could cause as much as 70 percent of loan businesses to close their doors. With so many closed down, millions of low income people would lose access to the only type of credit available to them.

One analysis of the proposed rules shows that once the regulations suggested by the CFPB become law, the industry would see an 82 percent revenue drop. This percentage is an amount that most small lenders would be unable to absorb. Another study completed by Deloitte Consulting came to the same conclusion. Deloitte released a statement about its results that said, “Our analysis of the potential rulemakings by the CFPB indicates that none of the Financial Service Centers of America, or FiSCA, members would remain economically viable, potentially leading to the closing of most, if not all stores, resulting in the loss of jobs for most, if not all employees.”

A Disinterested Agency

Because small businesses create more than 60 percent of private sector jobs in the United States, Congress added an addendum to the Dodd-Frank Act that requires the CFPB to assemble small business panels when they are considering regulating a particular sector. The CFPB created one such panel for the small loan industry when it was developing its list of regulation proposals.

One panel member said, “The entire process was an eye opener because the CFPB didn’t even seem to understand the differences in our product offerings like what are installment loans versus payday loans versus car title loans. They really needed to do a product-by-product analysis before they put out a proposed rule, and it didn’t seem like they had done that yet.”

Other types of lenders have also expressed concerns to Congress regarding the proposed regulations that the CFPB is considering. Auto loan lenders and even community bankers are worried that the additional rules could stymie their businesses and prevent everyday people from gaining access to the funds that they need.

Are Small Loan Lending Practices Unreasonable?

When a lender provides a short-term loan for $500 and charges a fee of $50 for it, the annual percentage rate for the loan is much higher than it is for other types of loans. However, if a person is paying this lending fee to avoid a late payment charge from his or her mortgage company, then the total cost may actually be less. In addition, when delinquencies begin affecting a person’s credit rating, the costs start to add up in the form of higher interest rates for every other kind of credit-based purchase that he or she makes.

The CFPB may also be missing another problem that is affecting many of the nation’s citizens, which is the lack of available credit for those with poor credit ratings and limited incomes. Often, people who make low wages fail to qualify for traditional credit cards that come with low annual percentage rates. This places them at a disadvantage when money emergencies arise.

Should Tighter Regulations Exist?

To help people avoid becoming mired in debt that they are unable to repay, the installment loan industry should verify a person’s ability to pay back a loan. However, the CFPB should not regulate the industry to the point where it is unable to help those who are in need of emergency funds. For additional information about whether the installment loan industry should be more tightly regulated, visit the Personal Money Store website.

When it comes to payday loans, there are many myths and misconceptions about whether a short-term loan can help borrowers boost their credit scores to qualify for better conventional credit cards or lower-interest loans. The complete answer is complex. While some borrowers might see a slight improvement in their FICO scores after taking out a

When it comes to payday loans, there are many myths and misconceptions about whether a short-term loan can help borrowers boost their credit scores to qualify for better conventional credit cards or lower-interest loans. The complete answer is complex. While some borrowers might see a slight improvement in their FICO scores after taking out a payday loan, the outcome is determined by whether the lender actually reports to the credit bureaus, how the borrower repays the loan and the subsequent long-term lender’s policies.

Payday Lenders Have Discretion in Reporting Loans to Credit Bureaus

Smaller companies often do not require a credit check during the request procedure since the loan is secured with a promise for payment with the next paycheck. Additionally, they rarely share information with the credit agencies, so there is no impact on a borrower’s FICO score.

However, most reputable payday lenders do run a credit check on consumers to ensure that they are capable of repaying the loan. This inquiry appears on the credit file. Each lender also has the discretion of reporting payments and payoff dates to the three major credit bureaus – Experian, Equifax and Transunion – as well as other rating agencies such as CoreLogic. Sometimes, borrowers may receive a small bump to their credit scores by establishing themselves as a credible risk.

Some lenders view payday loans as a red flag. Credit scores are designed to predict future money management behavior, and these short-term, low-limit loans indicate a financial obstacle in the past. Even consumers who pay back their loans as agreed have later discovered that their applications for future conventional loans were denied because of their payday lending history.

While a payday loan does not usually boost a FICO score, it can help maintain the current ranking by preventing a ding on the credit report for a late payment. Credit card, auto and mortgage loans that are more than 30 days past due are reported to the three major credit bureaus. This hit not only lowers credit scores immediately, but the information also stays on the file for seven years. Most creditors view a recent incident as one that has occurred within the past two years.

Borrowers who are habitually 30 days late will see an even larger negative impact on their credit score. Additionally, late payments that extend past 90 days are considered just as serious as a bankruptcy, lien or repossession.

These incidents mark a borrower as a higher risk. Based on this information, lenders may choose to deny a loa form or offer loans with higher interest rates or lower limits. Credit card companies also regularly review the credit reports of their current customers. Too many late payments combined with a lowered credit score can trigger a creditor to raise interest rates even if the borrower has never defaulted on that particular account.

Tapping a temporary payday loan to prevent this negative impact is often worth the higher interest rates and fees a borrower must pay on a cash advance.

Credit Scores Will Drop When Borrowers Default on Payday Loans

When a borrower fails to repay a payday loan as promised, the lender usually sells the account to a debt collection company. Debt collectors do regularly report to the credit bureaus, and accounts that are in collections have an immediate and drastic negative impact on FICO scores. The original lending institution can alternatively choose to file a lawsuit against the borrower to recover its money. If the court rules in the company’s favor, then this action appears on credit reports and lowers scores.

In addition, several mortgage lenders have publicly revealed that they deny mortgage loans to consumers who have a payday loan on their credit reports. Fulfilling the obligation in full and on time does not change this policy. Other underwriters view a consumer who has taken even one payday loan within the past year as being too high risk to become a homeowner.

Economic volatility is a distress signal that is constantly being emitted from the global financial sector. During times of economic uncertainty, attention tends to gravitate towards businesses that thrive even in an environment marked by widespread economic turmoil. Why is a certain business sector doing so well when others are struggling to survive? This question

Economic volatility is a distress signal that is constantly being emitted from the global financial sector. During times of economic uncertainty, attention tends to gravitate towards businesses that thrive even in an environment marked by widespread economic turmoil. Why is a certain business sector doing so well when others are struggling to survive? This question is even more pressing when the economic pain is being experienced across multiple sectors around the world over long periods of time.

Financing Economic Democracy Within the New Cooperative Business Model

Economic democracy is often ignored as a viable solution to the global economic crisis. If it is discussed at all, it tends to be treated as an obscure concept, an abstraction or an impractical ideology. It is rarely implemented or discussed within any existing institutions. Generally speaking, the mechanisms for economic democracy are poorly understood, especially within the United States. For this reason, it deserves careful attention.

The Mondragon Corporation Presents a Working Model for Emerging Economies

The largest global cooperative in the world is the Mondragon Corporation, and their mission statement encapsulates the company’s philosophy: “Mondragon is a cooperative business organization integrated by autonomous and independent cooperatives that competes on international markets using democratic methods.” The Mondragon business model originated in the Basque region of Spain, and it was founded in response to an economic crisis that was impacting the lower-income population of the area disproportionately.

Today, the corporation uses an established management model that integrates democratic participation in all levels of governance. It also offers a unique model for job security. The internal structure of Mondragon is publicly available for review, and they maintain an internal policy of equitable compensation and employment security for all workers. According to the Basque media outlets, this area within Europe has one of the most fair income distribution rates in the entire region.

If an existing business wants to join the cooperation, they must convert into a cooperative business in order to be accepted. If a particular sector is hit by an economic downturn, the workers will simply be relocated to a sister business, and this policy choice creates low unemployment. Financing new cooperatives can be done in a variety of ways, and new worker-owners can visit www.Personal Money Store today to learn how to leverage expected future sales to get working capital.

The economic crisis of 2008 created huge changes within the United States as well. In 2012, a Chicago factory was scheduled to close after filing for bankruptcy, and the workers were facing termination, loss of severance pay and long-term unemployment. Inspired in part by the Mondragon cooperative business model, they contacted the United Electrical Workers Union, The Working World and the Center for Workplace Democracy. They raised the capital needed to convert the factory into a worker-owned and -operated manufacturing facility. The incipient business is called New Era Windows, and they now supply Chicago business and residents with high-quality windows that are soundproof, affordable and energy-efficient.

To examine the inner workings of economic democracy allows the outsider to glimpse the full potential of a nascent economic paradigm that is still gaining traction and momentum across the entire world. Workers disproportionately pay the costs for externalized and structural economic flaws, yet they are rarely perceived as an active constituency with any leverage or even personal agency. Worker-owned and -operated businesses change that assumption. Innovations in the business world can have lasting consequences for generations, so it is fair to say that the smart jobs and careers of the future are still gestating today.

It is currently unclear if the new owners reclassified the traditional Owners’ Equity account as a Workers’ Equity account within the company’s Chart of Accounts. This move could permit distribution of quarterly or annual dividend payments to workers. However, it is certain that the workers’ wages are faithfully following their productivity. Other signs of future development and growth in the cooperative sector are still subtle, but they are becoming increasingly obvious over time. Mondragon and New Era are certainly flourishing in an environment that is proving to be toxic, or even fatal, to many established, reputable enterprises of the ancient régime.

Working people should make informed decisions about whether to join a conventional corporation or to start a worker-owned cooperative business. However, financing is always an issue. Traditional lending institutions and banks tend to avoid this sector just because it is new. Start-up and operational costs present a perennial obstacle, so fledgling cooperative worker-owners can rely on PersonalMoneyStore.com to secure immediate merchant cash advances against their future collective revenues.

There has been much said about the payday lending industry as a whole. Some people feel that the industry itself is not well regulated and can be somewhat predatory. However, there is plenty of evidence to suggest that payday loans serve to fill a gap in the economy when some people are out of other

There has been much said about the payday lending industry as a whole. Some people feel that the industry itself is not well regulated and can be somewhat predatory. However, there is plenty of evidence to suggest that payday loans serve to fill a gap in the economy when some people are out of other options. Companies like PersonalMoneyStore.com provide a vital service boost to the economy.

One of the biggest problems that people face after losing a job, getting a divorce or going through any kind of major life change is that they do not have the collateral or credit history to qualify for a loan from a typical bank. In a major event, they may need money immediately and do not have time to wait for answers. Payday loans provide a stopgap for a short timeframe that allows these people to stay ahead of their bills. While some individuals contend that the interest rates on payday loans are too high, it is important to realize that the next closest service is overdraft protections offered by the banking industry. A closer look reveals that the average overdraft fee is approximately $27 but can be as high as $38 for a single overdraft. In addition, many banks charge ongoing fees and interest on accounts that remain negative over a period of time, which creates an even bigger financial hole. Thus, a payday loan may actually be the cheaper alternative for those who face the difficult fact that the money is not in their account at the time their bills are due. Even if they roll their loan over several times into the next pay period, their fees will increase at a set and predictable rate, and they will have direct control over how many times they are charged new loan fees.

In many cases, people who use payday loans to save the day would be at risk of losing their homes, access to utilities and cars if they couldn’t come up with the money. These kinds of situations lead to a downward spiral where families are unable to achieve stable footing and recover from hardship. Instead, a payday loan can prevent them from falling any further behind and give them an opportunity to catch up in a manageable manner. This is certainly a positive contribution to the economy.

How the Payday Loan Industry Can Make a Substantial Impact on the Economy

Interestingly, in a time of growing uncertainty about job stability, the payday lending industry provides approximately 155,000 jobs nationwide. There are more than 23,000 lending locations in operation, and each one employs an average of three to four people. Their salaries are in the mid-$20,000 range; plus insurance and other benefits are provided. The direct impact of the payday loan industry is that it adds several billion dollars to the national economy. It also provides a large source of tax revenue for both federal and state governments. The total contribution per employee is roughly $36,000 to the economy as a whole.

Payday lending can be a force for good in both direct and indirect ways. Lenders act to provide a service to people in need who would otherwise risk even further instability, and they provide an important source of revenue to the total national economy through their employees and suppliers. Customers who utilize payday loans are given the opportunity to handle financial instability in a safe and productive manner without falling further behind on bills, even when they are unable to secure lending through resources that are more traditional. Meanwhile, the creation of jobs and the business-to-business spending incurred by the payday lending industry are a boon to the economy.

]]>no Why Payday Lenders Thrive in Our Economy There has been much said about the payday lending industry as a whole. Some people feel that the industry itself is not well regulated and can be somewhat predatory. However, there is plenty of evidence to suggestPersonal Money Store Why Payday Lenders Thrive in Our Economy There has been much said about the payday lending industry as a whole. Some people feel that the industry itself is not well regulated and can be somewhat predatory. However, there is plenty of evidence to suggest that payday loans serve to fill a gap in the economy when some people are out of other Personal Money Store - Breaking News on the Markets, Economy and Business financial,news,celebrity,gossip,politics,economy,jobs,crisis,tragedy,popular,personalitieshttp://personalmoneystore.com/moneyblog/why-payday-lenders-thrive-in-our-economy/http://cfsaa.com/Portals/0/Policymakers/20090515_Research_IHS_EconomicImpactofPayday.pdfPew study finds shrinking middle class is an economic minorityhttp://feedproxy.google.com/~r/personalmoneystore/cHoR/~3/E_7AP8Qcj1U/
Mon, 27 Nov 2017 21:26:19 +0000info@personalmoneystore.com (Personal Money Store)http://personalmoneystore.com/moneyblog/?p=109576Pew study finds shrinking middle class is an economic minority

A recent Pew study found the presently shrinking middle class is now in the minority, as those between poor and well-off are becoming fewer and farther between. It’s a phenomenon that’s been observed and lamented for some time. Fewer people able to be middle class anymore The term “middle class” can be construed any number

A recent Pew study found the presently shrinking middle class is now in the minority, as those between poor and well-off are becoming fewer and farther between. It’s a phenomenon that’s been observed and lamented for some time.

Fewer people able to be middle class anymore

The term “middle class” can be construed any number of ways, but it’s generally taken to mean the middle third of the range of incomes. Granted, the definition can get a little arbitrary, but more or less it means people who aren’t poor but also aren’t rich.

The dividing line between middle class and poor, according to a recent study by the Pew Research Center, is a household income of $48,347 for a family of four, according to the Los Angeles Times. The dividing line between middle class and upper class is $145,041 for same.

However, what Pew’s research found is that the middle class no longer makes up 50 percent of the population. The upper and lower classes accounted for 121.3 million people, compared to 120.3 million in the middle class. In 1971, according to Pew’s data, about 61 percent of the population were middle class.

A shrinking demographic

The middle class even gets bad news from the government. Real wages, according to According to the Brookings Institute, U.S. Census data found incomes relative to central price inflation (CPI) shrank by more than 10 percent since 1999. Additionally, between 2008 and 2014, real median household income shrank every year save one.

Unfortunately, the shrinking middle class isn’t really news at this point, since it’s an ongoing news item that’s been reported on for years.

An ominous macroeconomic trend for the past few decades has been wage stagnation. The Economic Policy Institute found – using Department of Labor data – that real wages, or pay relative to the purchasing power of that amount of money, rose only 15 percent between 1979 and 2013 for the bottom 90 percent of income earners. Granted, the bottom 90 percent of income earners is a very wide group; to give one the idea of the skew produced by upper-class income earners, wages for the typical non-supervisory worker rose slightly less 9 percent in the period between 1973 and 2013.
The dissipation of earning power for most Americans has been a documented phenomenon for some time; those in the middle are now, at least according to Pew, fewer than those at the top and those on the bottom.

Getting more for less

The shrinking middle class has had clear beneficiaries. The EPI found productivity, or the output of goods and services across the economy, rose by almost 74 percent among typical, non-supervisory employees, meaning that class of worker is 8 times more productive than their counterparts in 1973, but only earn 9 percent more.

The middle class isn’t alone either; minimum wage workers have perhaps the most stagnant wages. Real minimum wages, meaning relative to purchasing power, have actually fallen; a minimum wage earner in 1968 earned the equivalent of $9.58 in 2013, though the actual minimum wage in 2013 was $7.25. There have been repeated calls for a national minimum wage of $10 per hour, though there has been no progress on that front. A few isolated cities have raised theirs to more than that amount, such as Seattle’s $15 per hour minimum wage, but little progress has been made beyond that.

Lender matching services like Personal Money Store and lenders that offer payday loans online and in storefronts advertise small, short-term loans as a quick fix to temporary financial difficulties. After a short request procedure, approved consumers are able to receive the money inside of the store within a few hours or have it deposited into

Lender matching services like Personal Money Store and lenders that offer payday loans online and in storefronts advertise small, short-term loans as a quick fix to temporary financial difficulties. After a short request procedure, approved consumers are able to receive the money inside of the store within a few hours or have it deposited into their bank account within a day.

Not only do critics of the payday lending industry object to the easy accessibility of these loans, they also object to the associated fees and percentage. A typical two-week payday loan in the amount of $100 can incur a fee of $15, which translates into an annual percentage rate of 391%. This common payday loan rate, which adheres to the appropriate state and federal laws, has been criticized. Detractors support capping the annual percentage rates so they fall within the range of conventional interest rates, a policy that payday loan proponents say would ensure zero profit and eliminate their business.

While there is no dispute that payday lending fees and annual percentage rates are high when compared to the more conventional fees and rates of traditional lending institutions, it is necessary to understand the reasons why it is an industry-wide trend. Are the high fees and rates that are hallmarks of payday loans being used to guarantee an extravagant profit, or are they a necessary part of operating a payday lending business?

Taking into Account the Costs of Providing Lending Services for Payday Loans

There are costs associated with the operation of any business, and payday lenders are no different. Regardless of whether they are lending payday loans from online or through brick-and-mortar stores, payday lenders incur costs that include:

The question is, how much more expensive is it for payday lenders to provide short-term, small-money loans than their more traditional lending counterparts? According to a study conducted by the Federal Deposit Insurance Corporation, or the FDIC, lenders assume a significant risk in lending payday loans; the default rates for payday loans far exceed the credit losses suffered by traditional banking institutions. The study also showed that there was a high average cost for originating payday loans.

Taking a Closer Look at Exactly What Makes a Payday Loan Business Profitable

If lending payday loans results in high fixed costs and rates of defaulted loans, how exactly does a payday lender make a profit? Critics of the payday industry point to the borrowing habits of two types of payday loan consumers:

• The repeat borrower
• The borrower who continually renews or rolls over their existing loan account

The borrowing habits of the second type of consumer are of particular concern. A report released by the Consumer Financial Protection Bureau, or CFPB, showed that 80 percent of payday loans are rolled over within 14 days, resulting in a balance comprised of more fees than the principal.

The previously mentioned FDIC study supports this assertion – up to a point. Repeat borrowers and borrowers who continually roll over their balances do indicate the profitability of a payday lender but only because they add to the lender’s volume of processed loans. In fact, the study showed that the amount of loans that are processed is the true determining factor of a lender’s profitability and that the borrowers who use the service most frequently make up the largest portion of a lender’s number of loans and profits.

The Fees and Percentage Rates Are Required for Payday Lending Profitability

The payday loan lender has to be able to make a profit while operating a business that incurs high operating costs and undertakes a large amount of risk. This can only be accomplished if the fees and annual percentage rates are high enough to cover those amounts. Capping off the rates of interest would only ensure that there would be no funds to cover the cost of processing the loan or to make a profit.

Europe’s debt crisis is endangering U.S. economic recovery in the era of globalization. The Euro hit a new four-year low against the dollar Monday. Greece, Spain, Portugal, Italy and Ireland are dragging down the European Union faster than a recent pledge of nearly $1 trillion dollars in bailout money can prop the alliance up. Britain’s

Europe's debt crisis is proving harder to solve than originally thought and threatens to slow U.S. economic recovery. Flickr photo.

Europe’s debt crisis is endangering U.S. economic recovery in the era of globalization. The Euro hit a new four-year low against the dollar Monday. Greece, Spain, Portugal, Italy and Ireland are dragging down the European Union faster than a recent pledge of nearly $1 trillion dollars in bailout money can prop the alliance up. Britain’s pound also dropped Monday to its market rate against the dollar since 2009. Some economists believe a stronger dollar, weak Euro and depressed E.U. demand for U.S. exports could morph the E.U. financial crisis into a worsening global economic crisis.

Is E.U. financial crisis contagious?

While the U.S. economic stimulus package seems to have staved off disaster for now, the Wall Street Journal reports that Europe’s $1 trillion rescue plan won’t solve the debt problems of its weaker economies, which could weaken the U.S. economic recovery. Economists warn that the severe government spending cutbacks in store for some countries will only make things worse. The Euro’s slide already has the British Pound in need of a small personal loan. After rising to nearly the $1.50 mark after Britain installed its new coalition government, the Pound dropped to its lowest level against the dollar since March 2009, falling as low as $1.4256 Monday.

Euro falls against dollar

The E.U. financial crisis has dragged the euro down to about 14 percent on the dollar this year. CNNMoney.com reports that the Euro has slipped so far and so fast that some experts are now predicting what used to be unthinkable: The euro could actually trade at equal value with the dollar sometime in the not-so-distant future. The euro tumbled to a four-year low against the dollar in Asian trading, slumping to $1.2234 compared with $1.2359 in New York Friday. The European currency later stabilized during London’s trading day and was posting a small gain in late New York trading.

U.S. economy has a stake in Europe

The E.U. financial crisis has already had a profound effect on the U.S. economy. The stock market was battered earlier this month by fears that Europe has done too little too late to contain the European debt crisis. Two separate bailout packages announced in the past few weeks for Europe have failed to ease Wall Street’s nerves. But the U.S. economy as a whole has a stake in crisis Europe.

Europe’s U.S. imports falling

The E.U. financial crisis is already having an effect on European governments and consumers, who are cutting back on spending. CNNMoney.com reports that the European Union was the largest destination for U.S. exports in 2009. But through the first three months of 2010, the EU had slipped behind Canada. Europe’s imports of U.S. goods were still up slightly from the first quarter of 2009. But the growth was much slower than the increase in U.S. exports to Canada as well as other large trading partners such as Japan and Latin American nations such as Mexico and Brazil.

Crisis Europe feeds on itself

While nothing good for the U.S. can be expected from the E.U. financial crisis, the Wall Street Journal reports that a weak Euro and U.K. Pound should help British and European firms sell more products to U.S. consumers and those in countries that value their currencies to the dollar. But even this debt relief comes with a catch: Britain and the continent sell most of their goods to each other, and they’re all broke.

There is hardly any category of the finance industry that has not carved out a niche for itself on the Internet. This especially holds true for the payday lending industry, which has come a long way from being an add-on service at check-cashing establishments and has continued to perform well during the recent recession. In

There is hardly any category of the finance industry that has not carved out a niche for itself on the Internet. This especially holds true for the payday lending industry, which has come a long way from being an add-on service at check-cashing establishments and has continued to perform well during the recent recession.

In the United States, over 33 percent of payday loans with bad credit issued in the last six years have been issued from online lenders. These lenders include those who operate completely online and storefront payday lenders who have services that are accessible online. The borrowers who tend to use online payday lenders generally have more income and education and are younger than the borrowers who typically frequent storefront payday lenders. These borrowers are able to access the lenders’ individual websites or use online providers of lender matching services, such as the Personal Money Store.

While the economy continues on its road to recovery, the demand for payday lending services will likely be impacted, especially with the possibility of more stringent regulations. Existing state regulations appear to affect storefront lenders by reducing their profit margins and the growth of revenue in the payday industry, but do these regulations affect how borrowers use online payday lending services?

How States Regulate and Restrict the Services of the Payday Lending Industry

While there is not yet a set of nationwide regulations for the payday loan industry, states are able to institute their own regulations for the providers of payday loans with bad credit. The precise rules that have been put into place vary from state to state, which has resulted in some states having more restrictive regulations than others. Some of these regulations include:

• Caps on annual percentage rates
• Laws making post-dated checks unauthorized
• A limit on how many times a borrower can roll over an existing loan balance
• A policy dictating a longer repayment period
• Providing a fixed loan limit amount
• Limits on the maximum number of easy loans with bad credit a single borrower can receive each year
• Limiting the maximum loan amount to a percentage of the borrower’s yearly income

Storefront payday lenders have no physical presence in 14 states and the District of Columbia. This is a result of the more restrictive state regulations that have either prohibited storefront payday lending providers or regulated them out of business by capping the annual percentage rates and fees to amounts that are too low to earn a profit.

Borrowing Habits and Online Payday Lending in Strictly Regulated States

According to a study conducted by the PEW Research Center, only 5 percent of potential borrowers in states with no storefront lenders would try to obtain an online payday loan or search for a payday loan from another source. This is this case even while some online payday loan lenders are still able to offer their services by using their business license from another state or by partnering with a tribal nation to claim sovereign immunity from state law. The reticence of potential online borrowers is often attributed to:

• The fear of the disclosure of sensitive information and identity theft
• The inability to bring concerns to a person

However, it is worth noting that even this 5 percent rate of borrowers in states that have no storefront payday lenders is similar to the rate of borrowers who use online payday lenders in states where lenders are able to maintain a physical presence. This is a strong indication that if the need is there, borrowers will seek out payday lending services despite the restrictions that states place on the industry.

Online payday lending, a topic discussed online at finance blogs like the one hosted by PersonalMoneyStore.com, is a sector of payday lending that appears capable of remaining constant. While restrictive state regulation of the payday lending industry adversely affects storefront lenders, those who offer their services online appear to experience very little change in how often their services are being used.

]]>no An Overview of Online Payday Lending Industry Customers There is hardly any category of the finance industry that has not carved out a niche for itself on the Internet. This especially holds true for the payday lending industry, which has come a long wayPersonal Money Store An Overview of Online Payday Lending Industry Customers There is hardly any category of the finance industry that has not carved out a niche for itself on the Internet. This especially holds true for the payday lending industry, which has come a long way from being an add-on service at check-cashing establishments and has continued to perform well during the recent recession. In Personal Money Store - Breaking News on the Markets, Economy and Business financial,news,celebrity,gossip,politics,economy,jobs,crisis,tragedy,popular,personalitieshttp://personalmoneystore.com/moneyblog/the-online-payday-lending-industry/http://www.pewtrusts.org/~/media/legacy/uploadedfiles/pcs_assets/2013/pewchoosingborrowingpaydayfeb2013pdf.pdfThe Negative Repercussions of a Payday Loan Banhttp://feedproxy.google.com/~r/personalmoneystore/cHoR/~3/1qlq_PcceAI/
Thu, 23 Nov 2017 23:19:29 +0000info@personalmoneystore.com (Personal Money Store)http://personalmoneystore.com/moneyblog/?p=109572The Negative Repercussions of a Payday Loan Ban

Let’s say certain consumer advocate groups got their way; what would the effects of a payday loan ban be? Certain demographics would lack access to credit (though some assert harmful credit), or would use potentially worse forms, among other potential effects. First effects of payday loan ban are denying supply, not demand The primary effects

Let’s say certain consumer advocate groups got their way; what would the effects of a payday loan ban be? Certain demographics would lack access to credit (though some assert harmful credit), or would use potentially worse forms, among other potential effects.

First effects of payday loan ban are denying supply, not demand

The primary effects of a payday loan ban would be shutting off a supply that many deem noxious, but not a demand. It’s been proposed for some time that the payday loan industry should be regulated out of existence, but the question posed there is what would take it’s place?

Whenever a prohibition is legislated into effect, there is often a supplication of the demand. There may be deleterious effects of cutting off said supply. In the case of financial products, more injury can be done by denying a supply of credit than by allowing it to continue to exist.

However, it does nothing to address why it is so many people needed the loan to begin with.

Supplication

Supplicating the lack of supply with more onerous options is one of the effects of a payday loan ban. According to a research paper by Kelley Edmiston of the Kansas City Federal Reserve, viewable here in PDF format consumers have been observed or could resort to a number of options.

Those with credit cards could take out a credit card cash advance or possibly incur over-the-limit charges. Over-limit charge fees, often around $40, can amount to nearly 1,000 percent APR over a several-week period; no better, and in fact worse, than the effective APR charged by a payday lender.

Bouncing a check is another possibility, as doing so can function as a form of short term credit. It has been observed after strict or outright prohibitive payday loan regulation measures are passed. According to a literature review in a 2013 Washington and Lee Law Review article (viewable here – in PDF) by Paige Skiba (one of the foremost authorities on the subject), a Federal Reserve Bank of New York study from 2007 found increasing rates of Chapter 7 bankruptcies, bounced checks and FTC complaints about debt collectors in North Carolina and Georgia in 2003 and 2004, directly after both states imposed payday lending restrictions.

The average bounced check fee in 2010, according to Edmiston’s paper, was $30.47, which can top 4,000 percent APR. Bounced checks also impact FICO credit scores, and if bounced knowingly, can be prosecutable.

Among other sources of alternative credit are title lenders and pawn shop loans. Fees for both of these services can be comparable to payday loans, but these are secured loans in that they are underwritten by a lien against property. In the case of pawn lenders, it can be any trinket of value such as a television, computer, video game console or jewelry, but for title lenders it is the title to one’s vehicle. Default results in loss of property.

Other alternatives include loans from family and friends or in some cases, resorting to “loan sharks.”

Deleterious effects

Aside from use of alternatives being one of the effects of a payday loan ban, there are also other consequences to consider. Utilities can be shut off, late charges applied, or transportation can be compromised due to not having requisite funds for repairs. That can, in some cases, lead to job loss. People can be evicted from their residences.

While those are perhaps not full justifications for keeping a (as some feel) noxious credit product available, what is to take their place? Is there a better alternative, ready and waiting on as large a scale. Not for everyone. Likewise, some actual payday loan customers are known to feel that while they despise the product, not having them may be worse; a 2014 article in the New Yorker quoted a young woman currently paying off some recent loans as saying the same thing, besides mentioning that others felt the same way.

Payday lending serves a need. It may do so in perhaps not the most angelic way, but it does. The need will not dissipate if one method for fulfilling it is taken away.

For a sector that prides itself on its virtue, credit union payday loans don’t seem a likely product to exist. However, despite the stigma of the product and the industry, credit unions and other entities are slowly taking an alternative product mainstream. Slow growth in credit union payday loans Payday and other short term loan

For a sector that prides itself on its virtue, credit union payday loans don’t seem a likely product to exist. However, despite the stigma of the product and the industry, credit unions and other entities are slowly taking an alternative product mainstream.

Slow growth in credit union payday loans

Payday and other short term loan lenders are often stigmatized, which might make it confusing as to why credit union payday loans were allowed to exist. There are a number of good reasons, such as bringing a service in-house that members might be getting elsewhere or trying to drum up new business and increase revenue.

Regardless, the number of credit unions offering some type of payday-type loan has increased. According to a Cato Institute report from 2012, the National Credit Union Administration (the federal agency which regulates credit unions) reported 479 credit unions offering the product in March of 2009; by June of that year, the number increased to 503. Periodically, news reports and press releases will describe new entrants to the market.

Exact numbers aren’t available, but a steady number of new credit unions offering the product are emerging. For example, one may be able to search for payday loans Tampa, and find a short term loan product available from a credit union.

To Be Frank

The mainstream of banking hasn’t really taken to payday lending, which is why credit union paycheck loans are something of an anomaly. However, the loans themselves aren’t quite what they seem.

Some CU’s offer basically the same product as private or online payday lenders, with the same fee and interest rates. No difference in the product but the signage on the door. Others offer them at reduced rates.

There are also a number of institutions offering payday loan alternatives, such as through the NCUA’s Payday Alternative Loan program, or PAL. The PAL program was created under the Dodd-Frank Act of 2010, which created grant programs for financial institutions to create alternatives to short-term loan products. The specifications are a loan principal between $200 and $1,000, a term of one to six months, fees no higher than $20 and interest rates no higher than 28 percent APR. NCUA-regulated credit unions can offer loans of this configuration, provided they stay within the federal guidelines.

Additionally, the Federal Deposit Insurance Corporation launched a small dollar pilot lending program from 2007 to 2009, which extended grants to 28 participating banks (mostly smaller community banks and trusts) to make small dollar loans. Principal amounts, according to the data recorded by the

The FDIC found charge-off rates (meaning loans at least six months delinquent) roughly the same as comparative loan products such as unsecured loans to individuals and credit cards.

Sword of Damocles

All payday-type products, be they traditional payday loans or credit union payday loans, are currently an item of interest for the Consumer Financial Protection Board. Earlier this year, the CFPB announced it was gathering information for proposed regulations for the industry. A number of credit unions called for caution, as regulating the product too harshly might impede with credit unions’ ability to participate in the market, according to the Credit Union Times.

The CFPB, it should be noted, is more of a watchdog than a regulatory body. However, since the inception of the CFPB, there has been no more anticipated action than what it does with the payday lending industry. The interested parties now happen to include more of the mainstream institutions.

]]>no Credit union payday loans among growing alternatives For a sector that prides itself on its virtue, credit union payday loans don’t seem a likely product to exist. However, despite the stigma of the product and the industry, credit unions and other entitPersonal Money Store Credit union payday loans among growing alternatives For a sector that prides itself on its virtue, credit union payday loans don’t seem a likely product to exist. However, despite the stigma of the product and the industry, credit unions and other entities are slowly taking an alternative product mainstream. Slow growth in credit union payday loans Payday and other short term loan Personal Money Store - Breaking News on the Markets, Economy and Business financial,news,celebrity,gossip,politics,economy,jobs,crisis,tragedy,popular,personalitieshttp://personalmoneystore.com/moneyblog/credit-union-payday-loans/http://object.cato.org/sites/cato.org/files/serials/files/regulation/2012/11/v35n3-5.pdfThe Bubble And Bust Cyclehttp://feedproxy.google.com/~r/personalmoneystore/cHoR/~3/P3kv53z7l2g/
Tue, 21 Nov 2017 22:56:20 +0000info@personalmoneystore.com (Personal Money Store)http://personalmoneystore.com/moneyblog/?p=109569The Bubble And Bust Cycle

In macroeconomics, one of the dominant forces is what’s referred to as the “Bubble and Bust” cycle, also called “boom and bust.” The idea is that demand, and thus value, for certain goods or services will rise until the market cannot bear the price and then the value of that commodity crashes, which can leave

In macroeconomics, one of the dominant forces is what’s referred to as the “Bubble and Bust” cycle, also called “boom and bust.” The idea is that demand, and thus value, for certain goods or services will rise until the market cannot bear the price and then the value of that commodity crashes, which can leave devastation in its wake.

Most recent recession due to a bubble and bust cycle

The bubble and bust cycle is exactly what George Santayana had in mind when he posited that those who don’t study history are “doomed to repeat it.” Each follows a similar pattern, though the minutiae will vary.

A commodity, be it a good or service, rises in price, which investors and consumers flock to. Eventually, a fatal flaw is exposed in the system of business that props up the market for the commodity. A “pin” of some sort pricks the bubble. Prices then drop.

The most recent recession was a prime example, the commodity being housing and housing debt. Financial institutions developed complicated methods of re-selling mortgages as dividend-paying assets, as well as being less-than-scrupulous with lending, to get more people to buy houses which they wanted more of. It also didn’t help that Federal Reserve policies favored the banks with very easy terms on lending capital.

Eventually, some people stopped paying those mortgages, which the whole scheme depended on to work. Since consumers, investors and banks had all borrowed too much money or exposed themselves to too much risk, it practically paralyzed the global financial system when the margin call came.

Bubbles are nothing new

The bubble and bust cycle has been a repeating theme for centuries. There are occasionally periods with only moderate recessive cycles, but the bubble-then-burst dynamic keeps occurring.

A classic example is the Dutch Tulip Craze, also called Tulip Mania, from the early 1600s. The background is that tulips aren’t native to Europe. Additionally, tulips grow very slowly; it takes years to produce a quality bulb. As the flower was introduced to Europeans, it was naturally prized for it’s beauty and became valuable due their scarcity. The Dutch grew the bulk of European tulips, so the harvests and crops were naturally of great interest for the commodity.

Speculators entered the market and began trading on tulip futures, much as is done today with other commodities. Trading drove the market value further and further beyond the intrinsic value and prices rose until single tulip bulbs commanded ridiculous prices. Investors stopped buying and everyone who had invested in them lost a fortune.

Granted, the above narrative is an extremely curt gloss; there was much more to the Dutch tulip craze and to other bubbles, but that’s the gist of it. Other examples include the South Sea bubble of the early 1700s in England, the stock market craze of the late 1920s and the subsequent Great Depression, the real estate crash in 2007/2008, and so on and so forth.

The point is that it keeps happening.

Intrinsic versus perceived

The bubble and bust cycle is a vast topic; a truly comprehensive overview would be lengthy to say the least, especially if reviewing all the different proposed causes and mechanisms by which bubbles and busts occur.

Any commodity has an inherent price, relative to a number of things, but still an amount of currency that a unit of it is worth. A diamond, for instance, is rarer and thus more valuable than a pound of fertilizer. (Which seems stupid when you think about it; fertilizer grows food.)

Some person or group finds a way to make an item more valuable than its intrinsic worth suggests. Other people buy into the idea, because they want to make money from selling the commodity – be it a physical object, a stock share or a future (or a unit of a commodity that will be produced in the future) – for more money than it commands at present. The price continues to go up as the increased revenue from the activity creates a positive feedback loop and there are few methods of positive feedback that work as well as cash.

There are a lot of people disposed to the opinion that a second tech bubble is happening now. The glut of “journalism” extolling valuations and IPOs would certainly lend credence to that idea; continually rising prices and commodity values are a hallmark of bubbles.

The miracle of compound interest enables modest savings to grow into a substantial nest egg over many years, but investing in stocks and other investments can generate real wealth during the same time period. The best strategy is to start investing when young and keep adding to your portfolio according to a recent post at

The miracle of compound interest enables modest savings to grow into a substantial nest egg over many years, but investing in stocks and other investments can generate real wealth during the same time period.

The best strategy is to start investing when young and keep adding to your portfolio according to a recent post at nbcnews.com.

The NBC report determined that if a family with a median income of $40,500 saved 15 percent in a savings account for 40 years, the total would come to $1.27 million. That’s a reasonable figure for retirement in today’s economy, but there’s no way to determine how things will look 40 years from now. Saving the money under the mattress would only yield $563,436.

The same money invested in stocks–at the average rate of growth of the S&P 500–would yield an astonishing $4.57 million. Nobody has a crystal ball that can exactly predict the future, but nearly $5 million dollars can guard against risks and protect your lifestyle far better than the more modest totals.

It’s Easier to Build Wealth when You Start at an Early Age

Building wealth is easier when you’re young because you can take greater risks when retirement isn’t looming in the near future. However, 63 percent of millennials are now diverting their retirement accounts into savings instead of investments.

The 2008 mortgage crisis and economic downturn might have triggered this behavior, but overcoming fear of investing is critical for young people who want to build real wealth, start a self-sustaining business or enjoy the benefits of a more luxurious lifestyle.

The Costs of Being Reluctant to Invest

Despite being computer savvy, millennials are reluctant to use their skills to research investments, manage the risks and build a diversified investment portfolio. A recent article posted at time.com found that only 24 percent of millennials understand the risks of inflation and the benefits of risk diversification.

Millennials still do a good job of participating in retirement accounts where they rely on each program’s ability to manage risks and choose investments for them. Unfortunately, it’s that kind of thinking that helped to create the mortgage crisis.

There’s no valid reason that millennials shouldn’t take charge of their own investment strategies given their computer abilities, networking skills and communications savvy. The costs of failing to invest when young include:

Being subject to the income erosion caused by inflation

Risks of Social Security solvency, which can’t continue in its present form through the retirement years of today’s millennials

Real-world examples that show savvy financial management is critical to success while ignoring your finances can generate tremendous risks

Putting off investing or starting a business until older when many people have trouble learning new skills

Trusting education to guarantee success when most of your peers are doing the same

Failing to take advantage of time-sensitive opportunities such as companies with high-risk/high-reward prospects

Trusting others to manage your finances when you should research and monitor your finances

Time creep that reduces the time you have to build wealth

Investors who invest their time and become intimately involved in their investments can earn a big profit in 10 years. Many people save for retirement during their entire careers without earning this kind of bonus according to a report posted at moneycrashers.com.

Taking Advantage of All Your Financial Opportunities

When you invest, you tend to look at the world differently. Investors are quicker to identify financial opportunities such as investing the maximum in a 401(k) to earn employer-matching funds. Learning about taxes can also help you build wealth because you can qualify for tax incentives, take advantage of untaxed or tax-deferred investments, earn tax-free capital gains by turning over your primary home every two years and find other valuable tax benefits.

Commonly overlooked investment and income generating opportunities include starting a side business while continuing to work full-time, investing in emerging market exports and researching biomedical investments. Biomedical companies often generate big long-term dividends when the FDA approves important drugs.

Nervous investors can gain experience without risking too much money by day trading. This kind of investment is always concluded on the same day so that investors don’t need to worry about what happens overnight.

Your returns from any kind of investment depend on how much you invest, how long you invest and which investments you choose. Real estate is relatively safe, and you can often build equity while financing your property. The rent can cover the mortgage, and it’s possible to generate a cash surplus.

When investing in stocks, you can diversify your portfolio to reduce risks. Take advantage of insurance products that build wealth and protect you against common business and health risks. There are also advanced investment techniques that you can learn to reduce your risks such as using puts and calls to protect investments.

You should save for what you want to buy, live below your means, rent a modest apartment and drive a modest car when you’re young. During this time of your life, you can concentrate on building your resources. Resist the impulse to buy luxury items and name brands. It’s also beneficial to cultivate more responsible friends instead of hanging with big spenders and risk-takers.

According to daveramsey.com, it’s critical to plan your lifestyle and investment strategy at each stage of your life. Everything you do when young will have lasting consequences on your income, opportunities, job prospects and lifestyle.

Debts are one of the most insidious risks for young people who really don’t really need a new house, fancy car, vacations to Cancun and every new electronic gadget. Raise your standard of living gradually–while building wealth through investments–and each step will be sustainable.

Living Below Your Means While Able to Enjoy Simpler Amusements

When you’re young and energetic, you can enjoy sports, hiking, mountain climbing, hunting, fishing and water sports. Enjoying simple outdoor activities will not only save money but also improve your health and appearance. Borrow books and videos from the local library instead of spending hundreds or thousands of dollars each year on entertainment expenses. The best practices for freeing money to invest include:

Reducing everyday living expenses

Creating a budget and sticking to it

Paying down debt

Investing windfalls to increase their yield

Developing a plan with your spouse so that both of you are working toward the same goals

Eliminating duplicate services and unnecessary entertainment expenses

Buying food strategically such as using coupons, stocking up on sale items, buying in bulk, cooking from scratch, etc.

Your Retirement Depends on Investing

Investing is ubiquitous in today’s economy. Banks invest, and your IRA and 401(k) make investments on your behalf unless you choose a self-directed account. The Social Security Trust Fund is an investment program that generates money to pay entitlements for potentially every American.

There are investments to suit every person. It’s important to invest in what you know, but that doesn’t mean you can’t learn about new investments. When you’re young, it’s the optimal time to learn, take risks and begin building wealth.

The country can’t seem to make up its mind about fast payday loans. While numerous financial experts and legislators warn people against getting them, the borrowing options for some are few. Until traditional financial institutions jump into the lending sector that lends money to borrowers with low or no credit scores, many people must turn

Fast payday loans make it easy to obtain cash in a pinch, but can be difficult to repay quickly.

The country can’t seem to make up its mind about fast payday loans. While numerous financial experts and legislators warn people against getting them, the borrowing options for some are few. Until traditional financial institutions jump into the lending sector that lends money to borrowers with low or no credit scores, many people must turn to fast payday loans. But, when fast and easy payday loans lead to slow and hard repayment cycles, borrowers remain in debt for years.

Payday Loans are Easy and Fast to Get and Hard to Pay Off

Finder.com reports that it’s easy to get into trouble with a payday loan because they are easy to get. Today, you can request one in person or online. All you need is identification, a source of income and a checking account. The lender will allow you to borrow a specific amount for a fee. If you’re requesting the extra funds in person, you’ll probably need to give the lender a post-dated check to repay the funds. Online processing usually requires you to give the lender permission to withdraw the amount from your checking account on a certain day.

Easy payday loans range in amount from as little as $100 to as much as $1,000. These loans frequently come with annual percentage rates, or APRs, that are around 400 percent, making it more likely for a borrower to spin his or her wheels just paying the interest without making a dent in the principal loan balance.

Before borrowers default on this type of loan, most attempt to make it right by rolling over the loan. Many payday lending companies permit a borrower to extend the terms of the original loan or roll it over into a new one. But, this option typically comes with a fee to do so, resulting in slow and hard repayment cycles.

What Happens When Fast Payday Loans Are Not Repaid on Time?

When a borrower defaults on a payday loan, the lender will attempt to withdraw the funds automatically from their checking account. They may try to take out smaller amounts to receive a partial payment. As they make these attempts, the bank may charge overdraft fees, causing the person to sink further into debt. When a lender isn’t paid, the company’s collections department will start contacting the delinquent person to persuade him or her to pay.

CNN Money reports that arresting people or threatening them with legal action over unpaid debt is illegal. In rare cases, unpaid debts can lead to jail time, but you’d have to defy a court order in reference to an unpaid debt for this to happen. Despite this, in Texas, payday loan companies are using the court system when borrowers fail to repay their loans.

Ann Baddour, the director of the Fair Financial Services Project at Texas Appleseed, said, “In addition to their outrageous rates and lending practices, payday loan businesses are illegally using the criminal justice system to coerce repayment from borrowers.”

While only a small percentage of delinquent borrowers wind up in jail, the threat of criminal action is an effective way to get borrowers to repay easy payday loans. To get around laws that prevent people from going to jail for debt, payday loan companies use bad check and theft by check laws, arguing that past due borrowers are committing theft or fraud.

Contact the Lender to Negotiate a Loan Settlement

Payday loan companies may work with you to negotiate loan installments if you’re not able to pay the money back on time. This may involve a long term financial arrangement, but it’s better than the company taking you to court. Keep in mind that lenders would prefer to collect what you owe from you directly rather than proceed to the next step, which involves selling your debt to a third-party debt collector.

John Ulzheimer, a credit expert, said, “It’s not inconceivable that third-party debt collectors are paying 3, 4, or 5 cents on the dollar. That makes lenders’ first priority to collect the debt themselves. The second option is to see if they settle with you directly for some amount of money. The third is outsourcing to a debt collector.”

Professional debt collectors can be especially nasty. They may call you 10 times in one day about the debt that you owe. These are the guys who threaten to sue, and they may even visit you at work. A professional debt collector will use the threat of a negative mark against your credit history to encourage you to pay.

You Could See the Inside of a Courthouse

NerdWallet states that when it comes to fast payday loans, some borrowers tend to think that these lenders won’t bother to sue for a small amount, but this is not generally the case. The Consumer Recovery Network’s founder, Michael Bovee, confirms that almost all consumer lawsuits are for relatively small amounts of money. He said, “I’ve seen lawsuits for under $500. Even Capital One sues for less than $500 these days. I see those regularly.”

Lenders often win these suits because the borrower fails to appear at court. Most don’t show up in court because they don’t know how to handle it. When the defendant fails to show, the judge of the case will generally enter a summary judgment. This lets the court begin to collect the funds owed to the lender on their behalf, resulting in aggressive legal action. It will depend on your state, but if this happens to you, then you could face property liens, wage garnishment and bank account levies. If you’re summoned to court, be sure to show up. The results are often less devastating.

When to Seek Advice from a Credit Counselor

When borrowers default on fast payday loans, they should seek advice from a credit counselor. Lauren Saunders, the associate director of the National Consumer Law Center, said, “You should not prioritize paying the payday lender over putting food on the table or paying rent.” With their help, you may be able to work out a payment plan with the lender, one that will allow you to pay what you owe while making sure that you’re able to cover the necessities.

If you strike an agreement with the lender, make sure that you obtain the details of the agreement in writing. Also, verify that the document confirms that your payday loan balance will be zero once you’ve complied with the terms of the payment plan.

You Can Avoid Slow and Hard Repayment Cycles

Fast and easy payday loans lead to slow and hard repayment cycles when borrowers fail to repay the loan by the due date. If you need money, make sure that you can repay it on time before turning to payday loan companies. Then, establish a savings account to avoid the need for a quick loan in the future.